Admit it, you thought the new Pac 12 media deal was all about money. Didn't you? Don't get me wrong, I'm glad this is the richest deal in college athletics, but with the Big East deal set to re-up next year and the B1G Ten set to end before this one expires, it won't be too long before the Pac 12 is once again looking at the college media landscape and thinking, "why are we bottom on the totem pole again?"
Recently I had a conversation with Dave that went:
Me: "You talk about the present and the past of this deal, I'm going to deal with the future, as in what this deal will look like 10 years from now"
Dave: "In 10 years we're going to be rich and on TV a ton, that's what it will look like :)"
Me: "That's funny that you think we'll be watching games on TV in 10 years"
Think back to 10 years ago. Did you watch a college event on your computer? As a matter of fact when you look at how sports media progression has gone over the last 10 years; live events and checking box scores in the newspaper, to local TV, to cable TV, to independent dedicated channels and checking box scores on the internet to watching on TV, blogging, watching 4 games at once on my computer, another 4 on my Xbox360 with game threads up as well.
Where will sports media be in 10 more years?
One of my biggest concerns when this deal came up for negotiations was looking at the number of years other conferences were signing on with networks. ESPN signed up the SEC for 15 years and won't be done until 2025. The Big Xii just finalized their new bribe of Texas... er... "media deal" that starts in 2012 and lasts for 13 years. The B1G deal will be renegotiated in 2016 after 10 years. I kept thinking that signing on for 10, 12, or 15 years was going to severely hamper the Pac 12's ability to stay relevant, get increasingly paid, and be at the forefront of the sports media landscape. 5 years from now Fox would be making a ton off the Pac 12 as advertising dollars increased and the Pac 12 would see none of that. ESPN would have new ways to distribute games on demand, wirelessly, through gaming consoles, and the Pac 12 would see none of that either.
Until I heard that we kept ownership of the Pac 12 Network.
That's a big deal. Rumors are we offered it to Comcast and they turned us down. Most likely Scott understood the future value of the PTN and wasn't going to sell it unless someone paid handsomely for it. There are currently only two other conference networks right now. The new Texas network was bought by ESPN for $300 million over 20 years. Texas owns no rights to the content, distribution and delivery of the network. That means if ESPN comes up with a great way for people to be able to go online, download games, watch events or view press conferences, ESPN gets to keep all the advertising, ISP provider fees, and subscription fees they charge.
The B1G Ten also has their own network that they share with Fox. Fox owns the minority stake at 49%. They collect all the revenue and distribute the proceeds to the B1G every year. Last year each school got approximately $6.5 million from the B1G network (my remedial math says that Fox got to keep approximately just under 6.5 million multiplied by 11). Since the B1G owns the majority stake they can experiment all they want with distribution channels, online media, or new delivery methods, but they only get to keep a little over half of what comes in from it.
We get to keep all of it. We own our network. That means if Scott and the PTN find a way to deliver real time broadcasts of games via an online video format... say YouTube or something like it, then all the revenue that is generated from that goes straight into the Pac 12 Media Enterprise. Furthermore, who's to say that of the 500 events being broadcast each year that a company that is wanting to get into more real time live broadcasting like YouTube (which is currently doing more and more live music events) wouldn't pay the Pac 12 handsomely to do so. Also the infrastructure is already in place. When we're looking at start up costs for the new PTN, we're only really looking at the ability to tape, produce and broadcast for TV. The online infrastructure is already in place and we only need to find the right partner (YouTube, Vimeo, JustinTV, ESPN3) to do our distribution. That's why I don't find it coincidental at all that YouTube was broadcasting the Pac 10 basketball tournament non-televised games and press conferences this year. It was a foreshadowing of things to come.
Another huge development in this was the creation of the Pac 12 Media Enterprise. They'll be responsible for collecting the revenue and distribution of the media. No longer are schools and AD's going to be responsible for negotiating media deals with little partners. The PTME will, just like this new deal, be in charge of talking with the media companies, creating the distribution of the media and collecting the revenue for the entire conference. This isn't some half-assed OSN that gets the leftover games that no one wants to watch but because of the fact they're loyal to Oregon they pay the $12.95 a month anyway.
This will be a brand new media conglomerate set up to eventually compete with the big boys of Fox, Comcast and ESPN for content and to explore and develop new revenue streams for both larger more established and desired games, but also for the some of the "non-revenue" making sports.
Here's what's funny, the PTN is going to broadcast 500 events, 36 of which are football games. They also get first choice of games twice a year. They also are third in line when figuring out who is going to broadcast games each week. That means the best games are going to be on ABC, Fox and PTN every week. Playing with the big boys. Oh yeah, the funny part? Out of the 80 football games a year Fox and ESPN each paid $1.5 BILLION to broadcast 22 games each. If 22 games is worth $1.5 Billion to the conference, how much is 36 worth?
The PTN will also showcase non-revenue or Olympic sports. These are sports that a lot of people would like to be able to watch, but we're stuck in the1950's when trying to do so. Either get a ticket and show up or try and find a box score in the paper. Why can't I watch one of the most storied track and field programs in Oregon? College Baseball at ASU, UCLA, Rugby at Cal, Tennis at Utah or USC. How much revenue is being generated by watching these games right now? If you said zero, you'd be right. The PTN is going to provide the avenue to exhibit these events. Unless I was in Eugene on the day of one, I would probably never go to a Track and Field meet. But if it was online, I might watch a few. I'm now a viewer that the PTME can take to advertisers or online distributors and sell to.
So what does this all mean?
It means that in 5, 8, 10 or even 12 years from now the Pac 12 is still getting paid for what it's worth. The deal with Fox and ESPN has an escalating clause that means that we're only getting about $15-18 million in year one, but closer to $25 million in year 12. Add in what the PTN will provide and you could be looking at each school getting $30 million plus 5-10 years from now.
It means that as the times change, and new delivery methods are created to showcase the talent of the Pac 12 we'll be able to keep up. If everyone is watching games on their mobile phones 5 years from now, they'll most assuredly be watching the Pac 12 games there too. Actually, if people are watching games on their mobile phones, they'll most likely be watching Pac 12 games since no one else has the flexibility, innovative freedom and ability to benefit from it like the Pac 12 does.
It means that when recruits for football, basketball, track, swimming think about what they've seen they'll think about the Pac 12. You'll have coaches going into kid's homes and when parents worry about seeing their son or daughter play, the coach will open his iPad, pull up YouTube and say, "which game from last year would you like to see?" It means better recruits come to the Pac 12, it means a better product to display on the PTN, which means more viewers, and more revenue for the schools even as the TV deal dollars are fixed.
It means this deal was done for the schools. The Presidents took a risk when they handed over all the media to Scott to sell to the highest bidder. Scott delivered the highest bidder. At the same time Scott took one of the worst media deals over the last 10 years and turned it into the best media deal out there. He also ensured that the Pac 12 has the ability to stay one step ahead of everyone else for the next 10 years.